There is … a very general rumour, which many have verified by their own experience, or which trustworthy persons who have heard the experience of others corroborate, that sylvans and fauns, who are commonly called 'incubi,' had often made wicked assaults upon women, and satisfied their lust upon them; and that certain devils, called Duses by the Gauls, are constantly attempting and effecting this impurity is so generally affirmed, that it were impudent to deny it.
I'm inclined to think, though, that Augustine's point is, when taken in context, not quite but almost exactly the opposite of the way Mathews (and the Malleus Maleficarum before him) have taken it to be. Immediately after the cited passage, Augustine goes on to say things that seem to be very skeptical of the whole idea.
Here is the structure of the chapter as I see it. The question is raised, whether, when Genesis talks of giants born when the sons of God mated with the daughters of men, we should understand this as saying (as indeed some have understood it to say) that angels fell from heaven out of lust for the human women, with whom they mated. The big issue here is that angels are spirits, and mating with women requires a body of some sort. He considers the possibility that the Psalmist, in saying that God makes his ministers flames of fire, is talking about angelic bodies; but concludes that it is unclear, and that the Psalmist might well mean that God's ministers should be ardent with love. However, Scripture does, indeed, seem to say that angels have bodies that can be touched; and (here's the passage above) that spirits can lustfully mate with women is such a common view, and seems to fit with enough claimed experiences of enough trustworthy people, that Augustine does not see himself as being in a position to reject it out of hand -- he would be merely impudent to do so without better reasons than he thinks he has. Taking it as granted, however, it's still not enough to tell us whether there might be spirits who have some sort of 'aerial' body, and Augustine passes on deciding the question. He then denies that the passage in Genesis is really talking about angels, and thus that it has anything to do with demons lustfully seducing women; he argues that it's clear that the passage is talking about men. Of course, some people might want to make a big deal about the term 'giants', but Augustine rightly notes that people of unusual stature can be born of human parents -- no need to bring in angelic mating as an explanation.
(He draws a rather lovely moral from the whole thing: "And it pleased the Creator to produce them, that it might thus be demonstrated that neither beauty, nor yet size and strength, are of much moment to the wise man, whose blessedness lies in spiritual and immortal blessings, in far better and more enduring gifts, in the good things that are the peculiar property of the good, and are not shared by good and bad alike.")
So Augustine, I think, is pretty agnostic on the whole thing; he does think that the evidence points to something going on (and that he has no particular reason for rejecting that there is), but he places no weight on it in the context: he remains explicitly agnostic about whether such claims show that there are spirits with bodies, and he explicitly denies that it has relevance to the question he is considering. Contrary to the Malleus Maleficarum interpretation, then, Augustine is not settling the matter of incubi and succubi, but passing on the question as not particularly relevant to his concerns; to the extent he addresses it at all, he simply defers to others. I suppose, though, it depends on how one takes the somewhat ambiguous phrase "it would be impudent to deny it," which can be understood as meaning, "It would be impudent for anyone to deny it," or as meaning, "It would be impudent for me to deny it." The two, of course, are not the same thing; the former leads to something like the interpretation Mathews puts on it, whereas the latter leads to the interpretation I'm inclined to give it.
